Thursday, December 4, 2008 marks the 5th round of US-China bilateral trade talks, formally named the Strategic Economic Dialogue, and jointly facilitated by US Sec Treas Henry Paulson and Chinese VP Wang Qishan. While topics for discussion include product safety, environmental issues, and revaluation of the Yuan, the heavyhitter this round centers around the global financial crisis. In his opening remarks, WQS emphasized, “Making joint efforts to tackle the current global economic crisis is the most urgent task before us.”
WQS went on to urge Washington to proactively stabilize its economy, boost savings rates, and protect Chinese investments, while the governor of the Chinese central bank, Zho Xiaochun, gave his two cents: “Over-consumption and a high reliance on credit is the cause of the US financial crisis. . . As the largest and most important economy in the world, the US should take the initiative to adjust its policies, raise its savings ratio appropriately, and reduce its trade and fiscal deficits.”
Washington, on the other hand, will be pushing for talks surrounding revaluation of Chinese currency. Officials have focused on this issue for some time, claiming that undervaluation of the Yuan unfairly favors Chinese exports. Some are looking for measures that will penalize China for not allowing its currency to appreciate more quickly. Some say that the timing of this is unfortunate for the US, who, amidst its Presidential transition, may not be squarely positioned to press China on making concessions at this time.
With the US in an official recession and China bracing for an economic slowdown, each trade party comes to the table with a clear need for response and recovery. Paulson firmly believes that the objective for this session would be to produce results that would bolster support, suggesting that the future of the SED would be uncertain under the Obama administration, though it is unlikely that US-China talks would discontinue. Perhaps we will just be looking at a change in how the package is presented?
Though this round isn't expected to produce results of a major breakthrough, murmurs of agreement on an action plan for air quality and perhaps even eco-city partnerships are in the air.
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